Rail Garant publications

The real crisis is observed in the market of open gondola cars, namely an excessive fleet, reducing the operators’ rates and the prices of new rolling stock with the slowdown in the rate of train movement in the networks and “manual’ control of coal flow from Kuzbass. What is the main cause of such problems? What are the ways and terms to overcome this tendency?

When there are “extra” wagons in the market, in general, it’s not bad. It means the industry is protected, and in the case of growth of the car base, the necessary quantity of cars will available. Such a situation took place in Soviet period; the concept of car reserves took place, too. This situation is beneficial to shippers, first of all because they can choose and get high-quality services at the price which is determined in the market at a given moment. And consider the situation with operators who have leasing obligations, significant expenses for repair and other expenses. Excessive rolling stock increases its turnover and reduces the efficiency as a larger quantity of cars is used to transport the same amount of goods. Of course, these are difficult times now for operators. This situation again confirms the existence of the market and market links. Both supply and demand dictate the price.

One of the possible ways of solving this problem is to support the balance of old and new rolling stocks, with optimization to increase operating life, and prohibit the use of old cars.

There is a fleet which is significantly worn. At the time the decision to extend the life of such cars was adopted, it was associated with the lack of a fleet due to the unavailability of production capacities. Now capacities of car production enterprises are sufficient, and the time to review old decisions, and the time to develop economic incentives to exploit new advanced cars has come. Now we can see such examples – there are restrictions on extending car life. But this deals with a much worn fleet. Perhaps we should reconsider such measures and tighten them.

Now mechanisms of adjusting transportation technologies, which should improve the situation in the network, are being implemented. For example, a measure is implemented within the 258th Decree of the Ministry of Transport; this rule regulates the transportation of empty wagons. According to it, an empty wagon can only be sent to a loading station where it is in demand and there is confirmation of GU12. Of course, there are a lot of nuances, but in general this is a positive step for the industry. Operators have learned to work according this rule, order is established, and competition has become (if it is possible to say so) cultural, that is competition which takes certain rules into account.

Being a person who has watched the process of a reduction in the share of cars belonging to inventory rolling stock and the increase in the private one since 2001, I am sure that it is necessary for the problem of car location including open gondola cars to be reviewed. Previously non-demanded rolling stock was sent to the reserve, where it was kept free of charge.

I don’t appeal to create conditions under which it will be possible to locate non-demanded cars free of charge anywhere, but I think that within the operators’ community it is necessary to learn to make arrangements for such things as reservation of “extra” cars in the period of seasonal slowdown instead of obstructing stations, preventing the effective operation of cars taking part in transportation. This is a task that we must make arrangement for, such as, for example, in the framework of Non-Commercial Partnership, and fix the regulations what would be better.

Operators criticize very strongly the “reincarnation” of inventory rolling stock in the form of VSP cars (private involved cars); they claim that such cars do not fit into the existing market model. What is your position on this problem? Is it necessary to keep this measure for some period, or better to give it up?

In order to properly consider reservation of “extra” cars as some technological reserve, all the cars must be used under the same conditions, within the same regulatory legal framework, with common rules. Now we have a VSP fleet which is used in accordance with the old technology, and it has the opportunity to apply market prices. Thus, we have less-than-honest competition.

It was initially proposed that the organization of the VSP fleet would be some intermediate stage until they will make arrangements for new conditions when cars will be 100% private. All the necessary measures have been implemented, including the 258th Decree, unification of empty run, the problem concerning the transportation of so called social cargoes. Therefore now we have all the prerequisites to reduce the VSP fleet.

Today the involved fleet amounts to about 105 thousand cars. This is VGK cars, now the Federal Freight company. They can be put out of operation quarterly in four stages; this process can be completed by the end of 2013.

The consolidation of the car fleet is taking place on the market; your company is one of its centers. To what extent will this process continue? How many “super” operators must be present on the market, and how many medium and small operators, correspondingly? What is your position on the transfer of “Transcontainer” to OTLK (STS Logistics); could it affect the market of container transportation in Russia, Kazakhstan and Belarus?

I think that the same situation as in other markets will take place, that is there will be no more than 10 dominant players. There will be dominant players will be in each form of rolling stock. There will be 5-10 companies in universal rolling stock, while captive companies associated with cargo base will be kept for specialized cars. The fate of small operators will depend on their ability to survive in s highly competitive struggle with the leaders of the industry.

A unified tariff for an empty run of universal rolling stock was introduced to the market in November. Can some preliminary results of this measure be estimated?

It is too early to draw any conclusions. First of all, it is necessary for statistics to be obtained, and then it is necessary to compare how empty cars used to run, and how they began to run under the new conditions. Over the next three months operators will make adjustments in the logistics of their transportation; it could have an impact on prices. The first estimate of the assessment of the efficiency shall be given in three or four months.

What is the situation on the market in the segment of specialized rolling stock (large-diameter pipe transportation, tank–containers, etc.)? Do the factors of restricted infrastructure capacities affect these types of transportation, or do difficulties take place only concerning open gondola cars? What is your forecast for bulk oil cargoes, taking the released fleet of Vostokneftetrans and other market factors into account?

There is no crisis concerning volumes in the segment of open gondola cars, there is extra rolling stock and technological limitations on exploiting the private fleet. These factors contribute to the reason that cars run slower, and infrastructure is used irrationally. Of course, this has an impact on the speed of movement of cars of other types, because we have the same infrastructure and the same traction, too. As a result, cars of all types have trouble.

As for large-diameter pipe transportation, we haven’t seen such transportation volume as was predicted. Now construction of some pipelines is postponed, therefore there is no expected growth. As for tank-containers the market situation is stable, and demand is significant. As for bulk oil cargoes the next year will be difficult. But we consider this segment with optimism because oil was transported, is transported and will be transported. Of course, part of the volumes went into “the tube”, but nevertheless we expect that the situation will be stable, and we do not forecast such imbalance like we have in open gondola cars.

Today the question concerning the experiment with “local” carriers has risen again, although JSC RZD insists that the experiment will not be an effective tool to attract private money to locomotives. What is your opinion on this question?

Now own train formations are already working on the network. We are also working on alternatives to equip own cars together with locomotives with short arm. As practice shows, clients are satisfied with such service. The involvement of private investors into the use of locomotives promotes more careful planning of transportation. With the appearance of private locomotives, the technological discipline of shippers has become better. This is due to the fact that private operators explain to clients that if he complies with certain technological requirements, it will result in significant cost reduction of transportation processes, because the locomotive will not stand, etc. The technology is organized in such a way that the client is satisfied with services and he himself begins to work more rhythmically. This is especially important for those segments where in the absence of warehouses the stability and the assurance are required, and everything must run like clockwork. Therefore, the positive effect of attracting private money into locomotives is not long in coming.

Kommersant Business Guide “Cargo railroad transportation”